US-Iran negotiations ease tensions, leading to a steeper US Treasury curve; falling oil prices may aid US consumer and industrial recovery; PBOC conducts 2 billion reverse repo operations to stabilize expectations — 0602 Macro Overview
- Positive signals from US-Iran negotiations are easing geopolitical tensions, leading to a sharp decline in oil prices. The US Treasury yield curve has steepened, the Federal Reserve remains hawkish but rate hike expectations are converging. High-frequency data shows US inflation pressure easing and resilient employment. If an agreement is reached, the 2Y yield may drop to 3.8%, while the long end's downside is limited by supply and re-inflation constraints.
- In Q1, US stock earnings diverged: technology led, financials and consumer sectors improved, healthcare remained under pressure, and industrials declined, but electronic equipment and metals maintained high prosperity. The market is focused on whether high capital expenditures in AI can translate into profits, and whether falling oil prices will provide opportunities for recovery in consumer or industrial sectors.
- On June 2, the People’s Bank of China conducted a 200 million yuan reverse repo operation—a very small scale, reflecting ample banking liquidity and intended to stabilize expectations. The reduction of reverse repos from 500 million to 200 million is not sufficient to indicate a policy shift. If interest rates continue to fall too rapidly, the central bank may correct via official media.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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